The Commission has issued an order instituting public cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 against Gary J. Pierce, of Studio City, California, and C.S.I. Ag., a Turks & Caicos company.

In the order, the Division of Enforcement ("Division") alleges that from July 1997 to February 1999, Pierce and CSI solicited investments in a $500 million unregistered bond offering for the Government of Free Vietnam, a political association in Garden Grove, California, via its Internet website and its newspaper. The Division further alleges that the promotional materials promised potential investors who made an initial $10,000 minimum investment a 5.5% annual return, plus double their original investment at the end of five years, resulting in an overall average annual return of at least 19.6%. According to the Division, Pierce and CSI represented that the bond offering was collateralized by $500 million of CSIs gold reserves in Chile, the total value of which was in excess of $20 billion, when, in fact, they had no reasonable basis for assigning any value to any such gold reserves, and they knew or were reckless in not knowing that the extraction of any existing gold would take years and millions of dollars. The Division further alleges that Pierce and CSI knowingly or recklessly failed to disclose the fact that 70% of the money invested would be used for fees and other activities that would generate no revenue, and that only 30% would be invested in an unspecified "yield rich trading program," which would have to generate an average annual rate of return on those funds in excess of 56% for five years to pay investors the rates of return promised. The Division alleges that Pierce and CSI violated Sections 5(c), 17(a)(1) and 17(a)(3) of the Securities Act.

A public hearing will be scheduled to determine whether the allegations against CSI and Pierce are true and, if so, whether a cease-and-desist order should be entered pursuant to Section 8A of the Securities Act.